A Rs 1,600-cr Unicef order, and even an oral cholera vaccine ready - no wonder Shantha Biotech’s new owners insisted its chief stayed on.
It is pretty nigh impossible to take Varaprasad Reddy out for a meal. Friends have tried. So has Alain Merieux, chairman of the venerable French pharmaceuticals company Mérieux Alliance. Merieux took the founder of Shantha Biotechnics to one of the best Parisian restaurants and was taken aback: His guest would have nothing except some bread and wine. The top brass of the global vaccines giant Sanofi-Aventis has tried, too. Varaprasad (he doesn’t like the Reddy caste tag) asked the restaurant for a bowl of rice which he then proceeded to garnish with packets of special home-made chutneys, filling the Lyon eatery with exotic aromas! Those who know this maverick entrepreneur well are used to his food fetishes, writes Latha Jishnu.
Since I have no wish to excite the curiosity of fellow diners in a restaurant, it seems politic to agree to Varaprasad’s insistence that we lunch at his Jubilee Hills residence in Hyderabad. Besides, the shutdown of the city ordered by agitators demanding a separate Telangana state decided the issue. Supervised by his mother, the eponymous Shantha, the coastal Andhra lunch that is spread out for us is clearly to his satisfaction. There is an unusual sambhar, an amazing assortment of fresh chutneys, including the famous gongura patchadi (a spicy concoction made from a leafy vegetable) and lentils cooked in milk, all of them in tantalising flavours and piquant aromas. You begin to understand the man’s fixation with home-made stuff. “All these are specialties of Nellore, where I come from,” says the entrepreneur who shifted base to Hyderabad in the 1970s.
The talk, naturally, is about Telangana. Like most of the entrepreneurs who came to Hyderabad in the past decades Varaprasad, too, belongs to the first generation that switched from agriculture to professions and later set up industries in and around the capital. Will a separate Telangana force him to shift operations? “My company was born here, in a small laboratory in Osmania University’s Department of Biotechnology. It grew here and is expanding in a big way. I have been here for almost 40 years. Where do I belong,” he asks. As he speaks, Koduru Ishwari Varaprasad Reddy, to give him his full name, vents his rage against the media which, he says, has been senselessly whipping up enmity among different groups and against the ham-handed way Delhi has handled the issue.
Although mellow to all appearances, Varaprasad’s anger against inequities of various kinds bubbles up quickly. It was anger that drove this mechanical engineer with not the slight clue about biotechnology or pharmacology to set up Shantha Biotechnics in 1993 so that Indian children would have access to cheap vaccines against several life-threatening diseases. All that happened after he attended a WHO conference in Geneva purely by chance and discovered that multinationals had a stranglehold on the market, and were milking it for all it was worth. There he also heard some disparaging remarks about India’s inability to develop a vaccine against Hepatitis B, a disease that kills around 350,000 people every year.
Thus began one man’s passion — and an extraordinary entrepreneurial feat which turned a struggling company set up with a capital of Rs 12 crore, most of it borrowed, into a prized asset that multinational companies have been vying for. Sadly, the lunch does not get its due respect. My host is not a hearty eater (he maintains a strict food and yoga regimen), which makes it difficult for others to go overboard with food. Besides, I have not been able to escape the clutches of a cunning little black gram chutney, forcing me to ignore the blandishments of the lentils and seasoned rice preparations. And Varaprasad, although obsessive about his company, can be engaging about the politics of the pharma world. Shantha Biotechnics is no longer his, but it is unlikely that this pioneering venture, which put India on the vaccines map of the world, will ever let him be free from its spell.
Shantha changed hands three years ago when Mérieux Alliance acquired 87 per cent of the company by buying out the Omani partners and the holdings of his family and friends. Although his two daughters sold their stake, he refused to do so and thus began a close equation with Alain Merieux, who bought the company because his doctor-son Christoph had initiated the deal before his tragic death. The Merieux partnership may have been largely infructuous because the French company was not really into vaccines, but its chairman continues to hold Varaprasad in high esteem. He has made the Indian entrepreneur a director at Merieux’s American subsidiary ABL, which specialises in virological research.
Shantha Biotechnics is now part of the Sanofi-Aventis group after its vaccines division Sanofi Pasteur, the world’s largest vaccine-maker, bought Shantha from Merieux for ¤550 million, valuing the company at a stunning Rs 3,740 crore — more than 16 times its turnover. “Yes, it’s a high price investors got, their Rs 10 shares going for Rs 2,345,” concedes Varaprasad, who remains MD with just about 13 per cent of the stake. But he bristles at the suggestion that the company is overvalued. “Shantha is special, please understand that. Our achievements are, by no means, small.”
It’s obvious that Sanofi, too, thinks highly of its India acquisition and its boss. They have agreed that there will be no change in the company’s name and have asked him to stay at the helm, and promised that he will be a lifelong director. “I was ready to step down but they readily agreed to my conditions. The most important is that the company’s philosophy and culture will remain unchanged — that Shantha will continue to offer high-quality vaccines at affordable rates.”
With Shantha set for a huge leap this year, thanks to a Unicef order worth Rs 1,600 crore, Varaprasad is on a high. But he is even more elated that the company has started commercialising its Shancol, the world’s first bivalent, easy-to-deliver oral vaccine against cholera, and for which the company has sought WHO pre-qualification. But that success is tinged with anger. The Indian government has yet to include cholera in its immunisation schedule, although WHO has included the killer disease in its priority list. Just as he railed against the government for lack of a biotech policy 15 years ago, Varaprasad lashes out at uncaring bureaucracy and indifferent government. “How long will our policymakers sleep over important issues of children’s live,” he asks, swilling the dessert, a sago kheer, rather indifferently.
But official rewards have come his way with a Padma Bhushan and an honorary doctorate from Sri Venkateshwara University for his pioneering efforts. There is no denying the great pleasure he derives from being addressed as Dr Varaprasad by his adoring staff or from boasting that Shantha Biotechnics has received 180 awards so far. If there is the faintest tinge of hubris, it is entirely forgivable. His philosophy of sharing the benefits of Shantha’s research with African countries, which regularly receive generous donations of life-saving vaccines, and also of sharing Shantha’s profits through ESOPs has given him a special standing. Now, he has embarked on a new mission: He lectures investment bankers on the need to look at societal benefits of new projects and not merely at the returns they can make. “I have become something of a public speaker these days on social entrepreneurship and I travel much more,” says Varaprasad, who is clearly relishing the role. This means the chutneys remain packed always.